Anyone ever heard of a "short sale company"?

Question

Hi, I am considering putting an offer in on a home in FL that is listed for $120K as a short sale. The property was previously listed for $160K with no bites. In reviewing the tax and owners records no Lis Pendens appears to have been filed but I've been told by my realtor it is a short sale. I was told that the process to obtain an answer or counteroffer would take 60 days. The realtor also told me that the offer would be handled by a "short sale company" who specializes in negotiating short sales with the lenders. For this service, the seller pays a portion of the "fee" and I would be responsible for the balance (I'm told $1,000). I am hesitant about this as I've never heard of a fee being charged in these situations. Is this something new?? I googled short sales and did find some sites that listed short sale companies. I was just wondering if anyone has experienced anything similar.

Thanks for reading. Ingrid

Thanks for reading.  Ingrid

CJ Green · Answer

I have been involved in short sales for quite a while and many companies were quoting an admin fee + percentage of sale price or exhoritant fees in excess of $1500 per file.  I was referred to and recently used a company that charged a flat all inclusive fee of $750.00 I was really satisfied with their performance.  If you are interested contact me and I'll forward you their information.

Ingrid Nagy · Answer

I would be interested in their info.  Please email me at Inagy@aol.com.  Thank you!!

Dave P. · Answer

Yep,
            
            Certain banks require that the property be listed for "x" amount of days (or months) before they will begin to negotiate...CW does this quite frequently.
            
            It's ridiculous "red tape" created by overwhelmed loss mitigation staffs.

Josh Zollinger · Answer

I have recieved information from a few "short sale" companies and one interesting thing that I have seen a few recommend is not putting the house on the MLS until negotiated.  I have heard agent  say the bank came back and said it must be on the MLS for 90 days first... any experience with this?

Ingrid Nagy · Answer

Thanks everyone for the posts.  They are all very informative.  Unfortunately, this was a property in a great location.  Before I got any futher it went under contract.  Thanks again!

Mitch Freed · Answer

I realize that banks don't pay realtors "full" commission.  What I meant was realtors receiving the full amount that was alloted to them by the bank and not paying the loss mit fee out of that commission.

If you want to go through each word in my post and pick it apart be my guest but I wouldnt waste my time pointing out the obvious and would like to stick to the main topic.

Steps 1 through 16 are the job of the agent...no doubt about it.  You signed up to do all that...and thats what you get paid to do.  If you find a buyer who closes the deal then you get paid.  The buyer has nothing to do with your responsibilities to your client and has no duty to look out for your client.  So why would they pay a loss mit fee to a negotiator who was hired by YOU!?

There is also no question that everything is a matter of frugality in this market.  An investor is going to negotiate the best deal possible.  As an investor...if I was presented with a loss mit fee to be paid out of my pocket instead of the listing agent's then I'm going straight to the seller and explaining to them how their agent is convoluting this deal and seeya at auction.

There are simply too many listings on the market for people to choose from for you to charge them to close a deal on yours.

How great a deal it is has no relevance at all.  How much money the investor stands to make on the deal is irrelevant as well.

Bottom line...your client isn't paying their mortgage...they need to sell for less than they owe....you need to find them a buyer...you get paid for that...if you can't close it on your own...you pay somebody to help.

Don't like it?  Don't list short sales.

Would you turn away a cash buyer if they refused to pay the $1K fee...would that be looking out for the best interest of your client?

Dave P. · Answer

Wow Mitch,

Seriously, I didn't mean to pick apart your post...truly.

I like listing short sales because I think it truly helps people.

I don't turn away any buyers. The offer for the loss mitigation company is truly optional. All offers get submitted to the banks, regardless of agreement to use a loss mit. company.

The best interest of my client is to get their home sold as quickly as possible. They know the process every step of the way. That's why I use professionals at every chance possible to ensure I give every opportunity for the deal to close.

I don't feel like arguing on some forum thread. Obviously, I wrote something that offended you. There were no intentions of this.

Later.

Dave P. · Answer

I don't think it's the buyer's problem. Quite the opposite, I think it's the buyers opportunity. Cupidity is motivating everyone...to include agents, buyers, banks, and loss mitigators. It's not the buyer's problem, it's their opportunity. And to your point, it's also not a "right".

Full commission? I don't think banks are in the habit of paying "full" commission on short sales.

Again, I don't think it's a problem. And, I don't see this as a matter of right, wrong, equality, etc....I see it as a matter of value. For me, it's a matter of "is it worthwhile"? As an agent, to do this profitably, you cannot be a jack of all trades. Although the commission dollars look huge (and easy), that's not the case. Like anything in life, you get what you pay for.

If it's a matter of frugality, then the buyer should:

1. conduct marketing
2. Screen inbound phone calls
3. Go on Appts
4. Qualify Sellers
5. Help Sellers with hardship letters, tax docs, pay stubs, bank statements, cc info, loan mod work sheets, financial statements, etc...
6. Analyze market data
7. Determine price point feasibility for banks and for buyers and for investors
8. Market to buyers
9. Buy signs
10. Buy lock boxes
11. Communicate with the bank
12. Negotiate the BPO with BPO agent
13. Don't forget the photos
14. Submit docs to bank
15. Communicate with Bank
16. Convince the Bank why they should take the offer
17. etc....

Truly, if they can do that and save $1,000, and that is their business model, then cool.

It is truly a matter of value, not justice or fairness.

Mitch Freed · Answer

My thought is...if the seller's agent takes on the task of the short sale and needs to hire outside help to get the deal negotiated then the fee needs to come out of their commission.

Charging the buyer a fee to have the short sale negotiated is almost like saying it's the buyers problem that the home is in short sale in the first place...but it's really the bank's and the seller's problem.  The bank is the one paying commission to the listing agent and therefore the listing agent needs to pay the short sale company the fee.

Johnston...you stated that the buyer should pay the fee...but why?  The seller's agent needed outside help to negotiate the deal.  Why should he/she get paid a full commission for outsourcing work?  You would pay a referral fee to another agent if they gave you the listing right?

They buyer is already paying a fee for the agents to do their job...if they need to outsource...whose problem is that?

Dave P. · Answer

Jon,

I couldn't agree more. As a matter of fact, i find this in almost every transaction, and I'm an agent. Therefore, the only ones I go through with are the ones that i can find and prove value to myself and to the customer.

Have you ever noticed that when banks list bank-owned property with real estate companies, they don't turn the utilities on? That may not happen everywhere, but in my area banks never turn the power on. In addition, the water has been cut off and the house has been winterized. As a result, the home appears completely distressed, even if the price does not reflect it.

The reason I bring this up is because a good agent will be able to sift through the good deals and filter out the overpriced, distressed garbage. And, in the process solve the customers problem, whether it's buying as a end user, selling, or investing.

In my opinion,  there are many bad agents listing short sales, without knowing what they are doing, and trying to "negotiate" good deals with the banks. In that respect, I agree with the "too many hands in the cookie jar" sentiment. Any hand in the cookie jar that doesn't add value, is too many.

Ingrid, another option is to tell your agent that you don't want to pay the fee and that you will negotiate the sale with the bank yourself. If anyone is expecting a good agent to find deals, market property, show property, qualify buyers, communicate with title/mortgage/inspector, and negotiate with the bank themselves, then you are in for a let-down somewhere in the process. There just isn't enough time, knowledge, or resources for one person to do it all.

just my thoughts.

Anyone ever heard of a &quot;short sale company&quot;?

Anyone ever heard of a "short sale company"?